Tuesday, December 27, 2016

Broke and Happy...The Poor Farm Budget 2017

This has nothing to do with budgets.Just a random photo of last summers' Morning Glories

For the last three years, since we bought this place, we've dreamed of being financially poor. Our greatest desire is to decrease our living expenses to the point that we can live under the US poverty line of $16,020, or at least, under the minimum amount that requires payment on income taxes, which in 2016 was $ 19,050. Finally, we can take solid steps towards that goal.

With our burden of owning two farms behind us, Keith and I were able to spend several hours yesterday, pen to paper, fingers to calculators, planning for our financial demise, our intended life of needing less in order not to have to work off farm. I don't know that I have ever been so excited about a new adventure in my life, except for my study abroad experience in Galway and maybe that one side trip to Kansas that one trucker took me on in 1978, other than those times though...never so excited.

As we expected there was very little left over from the sale of our big farm, after paying off the mortgage, attorney fees and credit card bills which we had accumulated last summer to keep up on property taxes and farm insurances. The subsequent sales of our reclaimed livestock and farm equipment also resulted in disappointing totals, but at the end of the day we felt ready to move into phase two of our "Get Poor Quick" scheme.

As of today, we are free of all credit card debt, own our vehicles, livestock trailer and tractor out right, have an itsy-bitsy savings account for emergencies and enough in checking for two months living expenses. We also have one small mortgage on this place and no permanent off farm jobs. I retired from nursing 6 years ago and do not plan to return, yet I could if required. Keith is working a few hours a week delivering packages, as seasonal help for UPS.

Traditionally, homesteaders are reluctant to share specific financial info on their blogs and I understand this, we do tend to be private folk; yet, on the other hand, whatever info we can share might help someone else reach that goal of self-sufficiency without suffering all the hard knocks we did. If we are willing to tell each other the best way to make butter, the most efficient way to seed a field by hand, the simplest method of grinding your own corn, should we not also help each other with the really hard stuff? The nickels and dimes? Just something to think about.

So, to get things rolling, I'm going to share with you our proposed budget for 2017. Keep in mind these are projections only. They are based on our expenses last year which were by no means "expected". We'll know more about how realistic they are after a few months. Your comments, suggestions and questions are welcome. If you see something missing, like a vacation allotment or medical insurance, ask me. In a future post I'll talk about our plans for income to meet these expenses.

Total Monthly Expenses...................................... $1970Annual Income Required.....................................$23,640
As you can see, our current expenses will require an income that is $7620 over the poverty line. If we make this much we'll be required to pay income tax, which is NOT a goal of ours, So, we'll be working on ways to cut these expenses even more, so that we can further lower our required income to survive, and survive well. Tomorrow for example, we are interviewing several new insurance agents, asking who can meet our minimum needs for the least amount of money.

Ironically, if we reduce our projected income from $1970/month to $1760/month, we would be eligible for food stamps, but government assistance of that sort, of any sort, is definitely not a goal. It would kind of defeat the whole self-reliant status wouldn't it?

And the not paying taxes thing...that's another whole post. It will probably come just before my post about why we don't have health insurance.

Hubby and I live below poverty level and no-we take no assistance in any form. He is retired, and I've always been a housewife. It's always surprising to me how different everyone's budget is. This was a very interesting post. Our biggest expense continues to be groceries (we are debt free including no mortgage), despite my HUGE and productive garden. It would be lower if hubby would be on board with eating more seasonally. Organic grapes in the dead of winter???? Not necessary, but we still are doing ok, so I don't say anything. What price can you put on a great husband!?!?Utilities , gasoline,property taxes, and various insurance eats up the rest. It's a tight fit, but MY little way of NOT paying taxes (that fund war, etc!) We all have our reasons. Thanks again for sharing this!

Eating seasonally is very hard, we've been so spoiled by the grocery stores who can provide us anything we want whenever we want. But, as we grow more of our own food we find we cannot tolerate the taste of grocery store veggies the way we once could. But still, I can't figure out how to grow bananas in Illinois.

I use a great budgeting app that you might be interested in checking out. It is called You Need A Budget (YNAB for short). It is subscription based and costs $5 a month. There is a free month's trial so you could check it out before committing. I am not affiliated with them in any way, but it has been literally life changing for me - a totally new way to think about budgeting. It sounds counter intuitive to spend money to save money, but it has saved me more than it costs many times over (I am retired and live on a very limited income).

You can. Based on the desired low income we want we could qualify for the Affordable Care Act subsidies for monthly payments but we cannot afford to pay the high deductible so we've opted out. If our income stays low we won't be punished, I mean fined, the astronomical amount of $900 in 2017 per person. We intend to continue to focus on our health via good food and outdoor work and we pray to have sudden deaths that won't require hospitalization. There will be a future, more detailed post, about our decision.

Intersting post. Our biggest expense is the mortgage on this place and that's going to be a long time until it's paid off. Our main plan when we budget is to make sure that only one of us has to work to be able to pay it all. So far so good on that one but things are certainly easir when we're both earning money (summer holidays when my wife is being paid and j can work for six weeks).I was interested in health insurance as well, and what level of cover it gives you? It's not a concern over here with the nhs bit it would worry me if we didnt have it.

The thing is, everyone "works" on the homestead as you know. Some positions are just paid cash, which we still need in modern society, but the more we can barter for outside services the happier we are. Health care is a different story when you still have children at home. I'll tell you more about the health care mess in the US soon.

Since mortgage, auto, insurance & utilities take up most of your budget - there's not a lot to play with.

Miscellaneous seems to be a big expense. What is it?? Auto - can you run on one vehicle most of the time & the other part time?? Like - drop the insurance on the car in the winter. Do you really need life insurance??? If so, do you need it on BOTH of you?Reduce your mortgage by refinancing?? Reduce Insurance by $50, Auto by $50, misc by $50 & Utilities by $50?? Seems easier somehow.Increase Farm output & sell more product. Chickens? Calves? Piglets? Soap? Honey?Work for a couple more years & pay down the mortgage to reduce your overall debt??

Well done Sharon!! Fantastic questions and comments. Misc. is a big expense, what falls in their would be items that are rare but can be expensive like a vet fee, plus building expenses for a milk house, awnings on our windows, a small porch for the grain bin, items above and beyond "maintenance". If we have the money we may be able to do some of those things. Home and vehicle insurance we did reduce by 50% today by switching companies and reducing our coverage amounts. We have a small car and a truck. We use the car for most trips (better mileage) and the truck to haul feed and take livestock to the locker plant, as little car cannot pull the trailer. In future we may be able to get a more efficient truck and dump the car altogether. Life insurance is still needed since we still have a mortgage on the farm. When that is paid off we'll consider dropping the life insurance. Refinancing the farm may be possible depending on Keith's future employment. Few banks are willing to work with the self employed even though our credit is excellent, for the simple fact that our income is so low. We don't want to increase income as again, don't want to pay income tax, so we are not focusing on selling more product, but selling enough to meet our needs. Selling more livestock means increased feed costs, gas costs to buy the feed we can't produce, more mileage on old vehicles. It's always a balancing act when it comes to selling farm products. Soap however, can increase in sales and still recognize a fair profit as can honey.

Thanks so much for sharing this. Money management is so important and yet no one talks about it. Our biggest issue is that we're still paying off my student loans (shockingly, I did not get rich working in social services). Health insurance is a big one too. But I watched my mother die of ovarian cancer and am loathe to put off regular care. We really need to take a fresh look at what we can do better this year as well.

I understand the awful reality of watching parents die. My folks were huge smokers and died at 63 and 67, both of COPD complications/heart failure and for years I too believed in regular checkups. But "health care" here is anything but, instead it is so disease oriented and pharmacy driven that I now turn to food as my medicine. I'm still fat from years of food abuse but every year that I do not see a physician, every year I use healthy food to treat any malady, the better I feel. Of course I may stroke out tonight and all my blah blah blah will mean nothing, but for now, we rely on our garden, our pasture raised meat and essential oils to keep us healthy.(P.S. I still eat chocolate cake when no one is looking, don't tell.)

Mmmmmm - In Canada, we can get 'Farm Status' for producing a certain amount of money from acreage. It has to be grown/made/produced on the farm - calves were raised for meat. There is a set amount depending on size of farm. For instance, I had 7 acres & had to make $3500 a year to get Farm Status. This reduced my taxes by 99%, let me buy gas at a reduced rate, let me write off all kinds of living expenses like heat, light, phone, insurance, gas, extra feed etc against the 'income' of the Farm - I ALWAYS had a loss too - which reduced my 'earned' income from a job!!! Which is the whole point. I thought it was worth the effort at the time.

I am always so amazed at how different our neighbors are. Even here the laws from state to state vary greatly. To get any real tax breaks in the US you must be a very big farmer and in fact we were told by the tax assessor last year our 7 acres was NOT a farm because we had no tillable acres, even though we raise beef, hogs, chickens, ducks and milk a cow. He wanted to tax us (property tax) at a higher residential rate. We have no close neighbors. We did argue the point and we won. Income taxes however, did not change.

What about when you are of age (don't know your ages)and start to draw your social security, since you were in nursing you were obviously paying that in. I agree with Cottontail Farm, no one talks about money management. I work full time off the farm, my insurance was paid by my employer for 19 years and last year I was required to purchase insurance myself although they gave me a "bonus" to pay for the insurance which really screwed up the budget and now my husband is drawing his social security and will be eligible for Medicare in the next few months which is really screwing up everything because of the "Afforable Care Act" my foot!!!! I will interested in hearing about the no insurance part :) Best of luck to you in the New Year!I look forward to readying your blog.

Hey you! Long time no comment. Welcome back. I am 57 and Keith is 54 so I have 4 and 1/2 years until I can collect early social security payments at age 62, IF it is still around then. We are not counting on it. And Affordable Care Act?!? What an oxymoronic name.

I applaud your goals, but honestly they are a little frightening. That is probably why we are moving at things a little slower. Hubby is ready to retire in a few months and we hope to scale things down drastically so that we can live off of a small retirement. Thankfully, we realized years ago that the simple life can be "the good life"

Comments are good, as long as you're a real person and not some goof telling me how you were cured of hepatitis by snorting a pulverized neon blue crayon. Your comments don't even have to agree with my viewpoint, I love a good discussion, but civility does matter.